Telstra Corporation Limited v Peisley [2006] FCAFC 79 (9 June 2006)

Last Updated: 19 June 2006

FEDERAL COURT OF AUSTRALIA

Telstra Corporation Limited v Peisley [2006] FCAFC 79

WORKERS COMPENSATION – appeal from Administrative Appeals Tribunal – calculation of normal weekly earnings – whether working overtime when on recall – operation of statutory expressions overtime, required, and on a regular basis – operation of the statutory expression required in relation to working overtime


Administrative Appeal Tribunal Act 1975 (Cth) ss 43 and 44
Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 4(1), 8(1) and (2), 9, 19


Comcare Australia v Pires [2005] FCA 747; (2005) 143 FCR 104 referred to
Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 referred to
Re Zarb and Comcare (1997) 48 ALD 718 not followed
Bortolazzo v Comcare (1997) 75 FCR 385 approved




















TELSTRA CORPORATION LIMITED v CHRISTOPHER PEISLEY

ACD 31 OF 2005


WILCOX, CONTI AND STONE JJ
9 JUNE 2006
SYDNEY (HEARD IN CANBERRA)

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACD 31 OF 2005

On appeal from the General Administrative Division of the Administrative Appeals Tribunal

BETWEEN:	TELSTRA CORPORATION LIMITED APPLICANT
AND:	CHRISTOPHER PEISLEY RESPONDENT
JUDGES:	WILCOX, CONTI AND STONE JJ
DATE OF ORDER:	9 JUNE 2006
WHERE MADE:	SYDNEY (HEARD IN CANBERRA)

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The applicant pay the respondent’s costs of the application.












Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACD 31 OF 2005

On appeal from the General Administrative Division of the Administrative Appeals Tribunal

BETWEEN:	TELSTRA CORPORATION LIMITED APPLICANT
AND:	CHRISTOPHER PEISLEY RESPONDENT

JUDGES:	WILCOX, CONTI AND STONE JJ
DATE:	9 JUNE 2006
PLACE:	SYDNEY (HEARD IN CANBERRA)

REASONS FOR JUDGMENT

WILCOX AND CONTI JJ

Context to the Appeal

1 This is an application by way of appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (the ‘AAT Act’) from a decision of the Administrative Appeals Tribunal (‘AAT’), constituted by the President (Downes J), Senior Member J W Constance and Dr M D Miller, which was made on 26 September 2005 and subsequently formalised on 19 October 2005. By that decision, the AAT determined pursuant to s 43 of the AAT Act, to set aside the decision of the applicant Telstra Corporation Limited (‘Telstra’) and granted an entitlement in favour of the respondent Christopher Peisley (‘Mr Peisley’) under ss 8(2) and 19 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (‘the SRC Act’) to compensation for average weekly overtime.

2 In support of its application, Telstra raised a single question of law, being whether the Tribunal erred in its construction of s 8 of the SRC Act in deciding to calculate Mr Peisley’s ‘normal weekly earnings’ pursuant thereto as inclusive of 7.87 hours of overtime work per week at an average overtime rate of 1.74. That figure of 1.74 was calculated on the basis of a 12 week period of time from 1 August 2002 to 23 October 2002, which was mutually agreed by the parties to be relevant for calculating Mr Peisley’s entitlement to compensation for overtime under the SRC Act. The figure was arrived at on the footing of Mr Peisley having worked an aggregate of 94.41 hours of overtime over that 12 week period, made up of 49 hours ‘at time and a half’, 26 hours ‘at double time’ and 19.41 hours of ‘recall’ (also paid at the same rate as double time), and thus an average overtime rate of 1.74 ‘across the board’. It was the latter element of 19.41 hours of so-called ‘recall worked’ that was controversial to the calculation of Mr Peisley’s ‘normal weekly earnings’, and gives rise to the issue the subject of the appeal.

3 For present purposes, the provisions of the SRC Act falling for consideration and interpretation may be summarised as follows:

(i) Section 4(1) which defines ‘normal weekly earnings’ to mean ‘the normal weekly earnings of an employee calculated under section 8’, and ‘normal weekly hours’ to mean ‘in relation to an employee... the average number of hours (including hours of overtime) worked in each week by the employee in his or her employment during the relevant period as calculated for the purpose of applying the formula in subsection 8(1) or (2))’

(ii) Section 8(1) which provides that ‘[f]or the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula...’

(the relevant formula is then set out and is not reproduced)

(iii) Section 8(2) which provides that ‘[w]here an employee is required to work overtime on a regular basis, the normal weekly earnings of the employee before an injury shall be the amount calculated in accordance with subsection (1) plus an additional amount calculated in relation to the relevant period under the formula:

NH x OR
Where:

NH is the average number of hours of overtime worked in each week by the employee in his or her employment during the relevant period; and

OR is the employee’s average hourly overtime rate of pay during that period.’

4 The parties tendered to the AAT an agreed statement of facts in the following terms (references below to ‘the Applicant’ were of course to the present respondent Mr Peisley and to ‘the Respondent’ were of course to Telstra):

‘1.1 The Applicant was born on 21 June 1952 and is currently 52 years of age.

1.2 The Applicant was employed by the Respondent for 30 years and 1 day, and at the time of injury was employed as an installer/repairer.

1.3 For the relevant periods in this case, the Applicant’s employment with Telstra was governed by the Infrastructure and Wholesale Enterprise Agreement 2000, and the Infrastructure Services 2002/2005 Enterprise Agreement. These documents have been filed and served by the Respondent in these proceedings.

1.4 On 29 October 2002 the Applicant suffered injury to his right shoulder during the course of his employment with the Respondent (T3 and T4).

1.5 On 25 November 2002 the Respondent accepted liability in relation to the Applicant’s "right shoulder soft tissue injury" ("the compensable injury") (T9).

1.6 The Applicant did not have any time off work as a result of the compensable injury. The Applicant remained working full-time hours on restricted duties. One restriction in place since at least 28 January 2003 is that the Applicant is unable to work overtime.

1.7 By Determination dated 19 March 2003 (T30), the Respondent determined that the Applicant’s Normal Weekly Earnings as at 29 October 2002 was $978.32. It was determined the Applicant was entitled to 100% of his normal weekly earnings from 21 November 2002 to 18 December 2002, and from 2 January 2003 to 26 February 2003. A number of subsequent Determinations were made by the Respondent confirming the Applicant’s normal weekly earnings as $978.32 and finding the Applicant entitled to 100% of his normal weekly earnings from 27 February 2003 to 2 July 2003.

1.8 On 19 June 2003 the Applicant requested a Reconsideration of the Determination dated 19 March 2003 (T53). The Applicant alleged that the overtime component of his Normal Weekly Earnings had been calculated incorrectly.

1.9 The Applicant ceased employment with the Respondent on 30 June 2003.

1.10 By a Reviewable Decision dated 13 August 2003, an Independent Review Officer of the Respondent affirmed the Determination dated 19 March 2003 (T58).

1.11 On 17 September 2003, the Applicant (through his solicitors) applied to the Administrative Appeals Tribunal for a review of the Reviewable Decision dated 13 August 2003.

1.12 The Applicant commenced full time employment with a different employer on 4 November 2003.

1.13 The parties have agreed that the data to be used in making the calculations for the Applicant’s normal weekly earnings are the hours worked by the Applicant during the period covered by the 6 full pay periods prior to his injury – from 1 August 2002 to 23 October 2002.

1.14 The parties have not reached agreement on the number of hours of overtime that should be used in any calculation of Normal Weekly Earnings. However, the parties agree that for the period from 1 August 2002 to 23 October 2002:
(a) The Applicant worked 75 hours overtime;

(b) The Applicant worked 19.41 hours of emergency duty/recall; and
(c) The Applicant was paid for 25.5 hours of emergency duty/recall (the Applicant was paid a minimum of 3 hours wages on each occasion he did emergency duty/recall even if less than 3 hours was worked).

1.15 The overtime worked by the Applicant from 1 August 2002 to 23 October 2002 is summarised below:

Dates	Overtime worked	Recall worked
01.08.02 – 07.08.02	2.5	10.75
08.08.02 – 14.08.02	5.5	-
15.08.02 – 21.08.02	5	-
22.08.02 - 28.08.02	10.5
29.08.02 – 04.09.02	2
05.09.02 – 11.09.02	5
12.09.02 - 18.09.02	11	2.33
19.09.02 – 25.09.02	3	-
26.09.02 – 02.10.02	11	1.33
03.10.02 – 09.10.02	1	-
10.10.02 – 16.10.02	15	-
17.10.02 – 23.10.02	3.5	5
TOTAL	75 hours	19.41 hours’

The Tribunal’s findings of fact

5 Apart from the agreed statement of facts, the Tribunal made various findings as to facts to which the parties referred the Court in the course of their submissions. We will set out those findings in the sequence in which they appear in the AAT’s decision. They partly duplicate the agreed statement of facts:

(i) by October 2002, Mr Peisley was 50 years of age, having been employed by Telstra for over 30 years; he held the position of installer/repairer; on 29 October 2002, he injured his right shoulder at work, and Telstra accepted liability to compensate him for the loss suffered as a result of that injury.

(ii) following the injury, Mr Peisley continued working on a restricted basis, one restriction being that he could not work overtime; in calculating his wage loss arising from the injury, Telstra did not take into account overtime worked prior to the injury, for the reason that in Comcare’s view, he had not been required to work overtime on a regular basis;

(iii) during the period of time from 1 August 2002 to 23 October 2002, the subject of the table above reproduced, Mr Peisley’s employment was governed by the terms of the Infrastructure Service and Wholesale Enterprise Agreement 2000 and the Infrastructure Services 2002/2005 Enterprise Agreement under both of which Mr Peisley’s ‘ordinary hours’ were defined as ‘363/4 hours per week, worked between 7am and 7pm, Monday to Friday’; each agreement contained a provision whereby Telstra might require an employee to work reasonable overtime; for instance the former agreement stipulated by clause 7.1 as follows:

‘7.1 if you are a full time staff member

7.1.1. Telstra may require you to work reasonable overtime. If you are a full time staff member, and you are authorised to work overtime, you will be paid at the overtime rates prescribed in the relevant Award for overtime worked’;

(iv) before his injury, Mr Peisley worked hours additional to his ‘ordinary hours’ in three different situations as follows:

(a) work after ordinary hours when extra time was needed to finish a job;
(b) weekend work; and
(c) recall work;

(v) concerning that first situation as to time needed to finish a job, he would obtain his team leader’s authorisation to continue a repair job on overtime that he could not finish within his ordinary hours;

(vi) as to the second situation, Mr Peisley worked nearly every Saturday as a result of having been contacted by his team leader, usually on the previous Wednesday, and asked if he wished to do Saturday work, to which he normally agreed;

(vii) as to the third and controversial situation of work on recall, the same arose when Mr Peisley was not at work and when he was called (at least normally by telephone) by Telstra to work on a repair job which was sufficiently urgent to warrant work outside ordinary hours;

(viii) in each such situation, it was Mr Peisley’s choice to undertake the additional work when the need arose, and he was never directed to do overtime which he had not agreed to do; moreover the work done on recall was paid by Telstra at a rate different to the other types of additional work;

(ix) altogether the additional work undertaken by Mr Peisley in the relevant period of time from 1 August 2002 to 23 October 2002 involved 75 hours of ‘overtime worked’ and 19.41 hours of ‘recall worked’.

The Tribunal's reasoning leading to its decision in favour of Mr Peisley

6 The AAT identified the issues raised at [18] of its reasons for decision, as follows:

(i) whether, when Mr Peisley was doing work on recall during the relevant period he was working overtime within the meaning of subs 8(2) of the SRC Act;

(ii) whether Mr Peisley was ‘required’ to work overtime during the relevant period within the meaning of subs 8(2) of the SRC Act;

(iii) if yes, whether Mr Peisley was required to do so ‘on a regular basis’ within the meaning of subs 8(2) of the SRC Act.

Telstra framed the issue arising on the appeal more briefly as whether the Tribunal was correct in finding that Mr Peisley ‘was required to work overtime during the relevant period within the meaning of subsection 8(2) and that Telstra was thereby liable to pay compensation’.

7 The AAT characterised the work undertaken by Mr Peisley on ‘recall’ as ‘overtime’, because it was related to work required to be done outside normal hours of work; in that regard, the Tribunal considered that ‘[t]he employee’s normal hours and the work which properly falls outside normal hours is a question of fact to be determined in each case’. So much was not in issue.

The AAT’s reasoning upon the issue arising as to whether Mr Peisley was working ‘overtime’ within sub 8(2) of the SRC Act when he was working on ‘recall’

8 The AAT drew attention to Mr Peisley’s evidence, which it accepted and which we have foreshadowed, that ‘recall’ ‘was work carried out after normal hours when urgent work was needed’. Mr Peisley recounted a system whereby ‘[h]e would be telephoned and requested to do work as the need arose’, being ‘work [which] was paid at a higher rate than other work done outside ordinary working hours’. ‘Ordinary Hours’, as we have earlier recorded, are defined in the Agreements as ‘363/4 hours per week, worked between 7:00 am and 7:00 pm, Monday to Friday’. The AAT pointed out that, neither the SRC Act, nor the Enterprise Agreements, define the meaning of ‘overtime’, but said that ‘the term is commonly understood to be work performed outside an employee’s normal working hours’, that being in the view of the AAT a proper interpretation of the statutory term, supported as it is by the Macquarie Dictionary definition as to ‘time during which one works before or after regularly scheduled working hours’.

9 Telstra had put the proposition to the AAT that ‘recall’ hours should not be characterised as ‘overtime’, since they might involve hours of work that are not necessarily ‘before’ or ‘after’ scheduled working hours, that is to say, ‘recall’ hours may be worked on a day on which the employee is not required to work. Telstra further pointed out that ‘recall’ work could be done during a period of leave and was paid for at a different rate than work designated as ‘overtime’ in the Agreements. The AAT found however that ‘work carried out outside normal hours will always be overtime’, emphasising that Telstra did not dispute the ‘time worked on Saturday is overtime even though no other work is done on that day or the following day’, and expressing the further view that time worked on recall should not be treated differently.

10 The AAT drew attention to Comcare Australia v Pires [2005] FCA 747; (2005) 143 FCR 104, where this Court (Jacobson J) held that the statutory phrase ‘average number of hours worked’ in subs 8(1) of the SRC Act was restricted to ordinary non-overtime hours, and that the only way in which an employee may be compensated for overtime is through the application of the formula in subs 8(2) of the SRC Act. In expressing its agreement with his Honour’s decision in Pires, the AAT pointed out that prior to that decision, overtime hours had been included as part of calculations under subss 8(1) as well as 8(2). The AAT further pointed out that there was no dispute that work done on recall was not undertaken during Mr Peisley’s ordinary hours. ‘Looking at the sub-sections in context’, the AAT reasoned, ‘the only reasonable interpretation is that recall work falls to be taken into account under sub-section 8(2)’, and that otherwise, ‘an injured employee who had been required to work on recall on a regular basis would not be compensated for the loss of this work in the event of injury’. Upon that footing, the AAT said that ‘[f]or the purposes of subsection 8(2), any work done outside the normal hours is overtime’, emphasising thereby that ‘[t]he employee’s normal hours and the work which properly falls outside normal hours is a question of fact to be determined in each case’.

11 The AAT accordingly considered that there was no justification for any approach that the recall hours and pay rates should be treated differently to the hours and rates of other overtime when applying the formula in subs 8(2), since ‘it would fail to follow the clear meaning of the words of the section’. The AAT concluded that in Mr Peisley’s case the hours of all overtime, that is, the overtime worked in each of the three situations of work after ordinary hours when extra time was needed to finish a job, weekend work and recall work, and the average rate of all that overtime, should be used in applying the formula of subs 8(2).

12 The next issue examined by the AAT in the course of its reasoning was whether Mr Peisley was ‘required to work overtime’ during the relevant period of time within subs 8(2), given the contextual interpretation of subs 8(1) in Pires. The contention of Mr Peisley to the AAT was that overtime is ‘required’ whenever Telstra has a need for the work to be done, and that the most appropriate dictionary definition of the verb ‘to require’ is ‘to impose a need or occasion for’. The contention of Telstra recorded by the AAT was that the interpretation adopted by Deputy President Burns in Re Zarb and Comcare (1997) 48 ALD 718 was correct; at paragraph 34, Mr Burns said as follows:

‘The tribunal has formed the view that the word "required" should be given its ordinary everyday meaning in the context in which it appears. In the tribunal’s opinion, the ordinary everyday meaning of "required" is the imposition, by the employer in an authoritative fashion, of an obligation upon the employee to work overtime on a regular basis. If the applicant’s view were to be adopted, namely that "required" means the employer "needed" someone to work overtime, regardless of who that employee might be, then it is arguable that any overtime at all would be "required". This would render the word "required" superfluous’.

For reasons which will emerge in some detail, the AAT disagreed with that reasoning and asserted that it should no longer be followed.

13 The AAT emphasised, in adopting a different approach, the need to take account of the context of the statute as a whole, and in particular the surrounding provisions dealing with the same subject, citing in that regard the well known dictum of Gibbs CJ in Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 304 that ‘[o]f course, no part of a statute can be considered in isolation from its context – the whole must be considered’, and pointing out moreover that the only source of compensation for loss of overtime earnings which is available to an injured employee is subs 8(2) of the SRC Act. Moreover the AAT submitted that it was necessary and appropriate to adopt the principle of interpretation of beneficial legislation, acknowledged for instance by Heerey J in Bortolazzo v Comcare (1997) 75 FCR 385 at 388 in the following balanced terms:

‘I accept the submission of counsel for the applicants that the Act is social legislation which ought to be construed, in the event of ambiguity, liberally in favour of injured employees .... But a liberal interpretation is one thing, rewriting the statute is another’.

14 Addressing next the import of subs 8(2), the AAT pointed out that ‘required’ appeared in the statutory expression ‘[w]here an employee is required to work overtime’, which expression the AAT said made clear that it is the employee that is the subject of the requirement, not the overtime. The expression is not a reference to an employee working required overtime. For that reason, the AAT agreed with Telstra that subs 8(2) refers ‘to the individual employee concerned, not employees in general’, and pointed out that ‘[t]o interpret the provision to apply whenever the employer has a need for its employees in general to do overtime would be an unjustified assault on the ordinary meaning of the English language’. The AAT pointed in that latter regard to the Macquarie Dictionary definitions of to ‘require’ as inclusive of ‘to call on authoritatively, order, or enjoin (a person, etc) to do something... to place under an obligation or necessity’ and of ‘enjoin’ as ‘to order or direct’.

15 Telstra contended that overtime, at least in the circumstances falling here for consideration, is voluntary for employees of Telstra. The AAT acknowledged this to be so ‘... in the sense that the decision of an employee to make himself or herself available for overtime is a matter of individual choice’, and moreover that Mr Peisley ‘was not directed or ordered to work overtime in the relevant period ... in the sense that Mr Peisley chose to make himself available to work overtime...’. However the AAT emphasised that ‘[i]n each situation in which Mr Peisley worked overtime he did so as a result of a specific agreement to do so’. Thus ‘[i]n the case of work done after hours he telephoned his supervisor and obtained his authorisation to continue’, and ‘[i]n the case of weekend work, this was done as a result of an earlier agreement, usually made the previous Wednesday’. Moreover ‘[r]ecall overtime was worked as a result of Mr Peisley and Telstra having previously agreed that Mr Peisley would be available to do this work within a particular period if called upon or merely because of his assent when he was asked’.

16 The further critical analysis continued to the effect that ‘[t]he crucial element in each of these situations is that on each individual occasion on which overtime was worked, it was as a result of an agreement between the parties’, and further that, ‘[o]nce an agreement to do the work was in place Mr Peisley was no longer simply a volunteer but was the subject of an agreement to do the work’. Moreover ‘[i]t was the existence of this agreement, whether or not it amounted to a binding contractual obligation, which brought about Mr Peisley working overtime and thus brings it within the normal usage of "required"’. Hence as the AAT went on to conclude, the substance and reality of the situation was that ‘[t]he moment both Telstra and Mr Peisley agreed that he would undertake the work, he was required to undertake the work’.

17 The AAT considered that support for that interpretation resided in the fact that ‘Parliament chose to make the relevant period for calculation of normal weekly earnings the relatively short period of the latest 2 weeks prior to the injury’, subject to variation in certain circumstances outlined in s 9 of the SRC Act. So much was said by the AAT to indicate ‘the intention of [subs 8(2)] is to take into consideration the basis upon which specific instances of overtime was worked rather than a consideration of whether overtime was required in a more general sense, such as a result of an implied term in the contract of employment’. Moreover the AAT further sought to rationalise its approach to construction by emphasising that the same did not render the critical word ‘required’ superfluous, and that its inclusion meant that an injured employee, who had not done work outside ordinary hours without the agreement of the employer, could not claim compensation based on that overtime. It was said to be ‘[n]ot uncommon for employees to start work earlier than required by their contracts of employment and/or work later than required purely as a matter of choice and without any request that they do so by their employers’ and ‘[a]lthough that work would be outside normal hours and therefore "overtime", there is truly no obligation on the employee (contractual or otherwise) to undertake the work’. Hence so, the AAT further reasoned, ‘[a]s the work is not "required" the employee cannot claim compensation for this time in the event of his/her being injured’.

18 The AAT saw no need for resort to the Second Reading Speech in relation to the SRC Act, given what it considered to be the clarity of the meaning and operation of subs 8(2) thereof.

19 The AAT concluded its reasons by addressing the issue as to whether Mr Peisley was required to work overtime ‘on a regular basis’ within the meaning of subs 8(2). The AAT observed that the agreed statement of facts recorded that Mr Peisley worked some overtime during each of the weeks which made up the agreed relevant period, and that it had been argued by Mr Peisley that this indicated that he had worked overtime on a regular basis. The AAT was referred by Mr Peisley to the following definition of ‘regular’ in the Concise Oxford Dictionary (6^th ed.), being ‘3. acting, done, recurring, uniformly or calculably in time or manner, habitual, constant not capricious or casual, orderly, (regular working ...)’. Upon that further footing, the AAT accepted Mr Peisley’s submission, and expressed its satisfaction that in the relevant period of time, Mr Peisley ‘worked overtime recurrently and uniformly’. That was because ‘[o]n the facts of this case the working of overtime in each week in the relevant period (which spans 12 weeks) of itself amounts to working of overtime "on a regular basis"’.

20 In reaching that conclusion, the AAT expressed its disagreement with what was said as follows in Re Zarb at [42]:

‘The tribunal is of the view that "regular" means a uniform or symmetrical pattern over time which can be described as usual or customary. To establish whether the overtime of an employee occurs on a "regular" basis, one would look to the overtime worked during the relevant period to determine whether the pattern is "uniform or symmetrical".’

21 In Re Zarb the AAT had considered the hours worked by that employee and concluded that ‘while there was a reasonably high volume of overtime worked by the applicant during the relevant period, there [was] no uniform or symmetrical pattern to the overtime’. However the AAT panel constituted in this case did not agree with that reasoning, asserting that ‘[i]t is the requirement to work overtime that must be regular’. It criticised the interpretation adopted in Re Zarb as looking ‘to determine whether the periods of overtime are regular in length’, and maintained that ‘the Act does not require "regular overtime"’, as this was said to be ‘made clear by the use of the phrase "on a regular basis" referring to the requirement to work rather than the hours worked on any particular occasion.’ In any event, the AAT considered that ‘even if the approach [in Re Zarb] was correct, we conclude that the schedule of overtime worked shows regular overtime in all categories’.

22 In the result, the AAT set aside the decision of Telstra under review, which determined Mr Peisley’s entitlement to compensation for overtime pursuant to ss 8 and 19 of the SRC Act, and substituted the decision outlined in [1] of these reasons, which stipulated an entitlement in favour of Mr Peisley specifically as follows:

‘1.2 on the basis of the 12 week period agreed by the parties to be the relevant period for calculating [Mr Peisley’s] entitlement to compensation for overtime under sections 8(2) and 19 of the Act, [Mr Peisley] worked:

(a) 49 hours at time and a half;
(b) 26 hours at double time; and
(c) 19.41 hours of recall (also paid at double time);

1.3 in the relevant period [Mr Peisley] therefore worked 94.41 hours of overtime at an average overtime rate of 1.74;

1.4 accordingly, [Mr Peisley’s] entitlement to incapacity payments, pursuant to sections 8(2) and 19 of the Act, is to be calculated on the basis of 7.87 hours of overtime per week, paid at an average overtime rate of 1.74 ...’

Those three categories of Mr Peisley’s hours worked dovetail of course with the table extracted in [4] of these reasons.

23 The decision was purportedly made in accordance with s 43 of the AAT Act, as per ‘Direction’ bearing date 3 November 2005 signed by Senior Member J W Constance of the AAT.

Telstra’s contentions on the appeal

24 Telstra argued that, having regard to the proper construction of s 8 of the SRC Act, the AAT erred in deciding that in calculating Mr Peisley’s ‘normal weekly earnings’ for the purposes thereof, he was ‘required to work overtime on a regular basis’ in the period 1 August 2002 to 23 October 2002 to the extent of so-called recall hours aggregating 19.41 hours.

25 Telstra contended that the Tribunal wrongly applied the word ‘required’ to what was in substance and reality a voluntary agreement on the part of both parties thereto. Because of the existence of what Telstra described as a degree of ambiguity in subs 8(2) of the SRC Act, Telstra sought recourse to the Second Reading Speech reading as follows:

‘Between 1976 and 1986, the Commonwealth’s expenditure on workers’ compensation increased by over 700 per cent from $25.04 million to $203.29 million per annum. Clearly, this situation could not be allowed to continue. Accordingly, the Government decided that the Compensation Act should be reviewed with the aim of establishing a more equitable and cost effective compensation system with particular emphasis on the rehabilitation of injured employees.

...

An employee’s normal weekly earnings will be based on his or her pre-injury salary, and will take into account certain allowances and regular rostered overtime which the employee is required to work as a condition of his or her employment’.

26 It is not readily apparent that this extract from the Second Reading Speech was addressing the subject of overtime in the context of compensation for employment injury. In any event, the extract begged the question as to the meaning of ‘required to work as a condition of his or her employment’.

27 Telstra emphasised that it was not a condition of Mr Peisley’s employment that he work overtime consistently, yet the AAT made no finding as to whether the secondary ‘voluntary agreement’ amounted to a binding contractual obligation, so as to found a requirement to perform overtime. Telstra contended that, if after agreeing to perform overtime, an employee changed his or her mind and informed Telstra that he or she would not perform overtime, for instance on a Saturday, then the employer could not require the employee to perform overtime ‘unless it was a condition of a contract’. Telstra added, perhaps somewhat unrealistically in the case of employment contracts, that if it was a condition of the contract, ‘then the employer would have a remedy for specific performance or a claim for damages’, whereas, if the ‘agreement’ was not a contract then the requirement would not be legally enforceable and there would be no requirement at all.

28 Telstra next drew attention to the evidence before the AAT to the effect that on occasions, employees could and did change their minds about performing overtime and generally speaking, ‘having agreed, most people did perform the overtime’. More relevantly as to so-called recall work, Telstra pointed out that there was no evidence to the effect that having agreed to be on recall, that an employee could not change his or her mind and so inform Telstra. Hence Telstra’s critical contention that ‘[o]verall there was no evidence to support the Tribunal’s finding that once having agreed to perform overtime there was a requirement to perform such overtime’.

29 Moreover Telstra characterised as ‘an illusionary argument’ that the categorisation by the AAT as overtime of the circumstance that ‘[i]t is not uncommon for employees to start work earlier than required by their contracts of employment and/or work later than required purely as a matter of choice and without any request that they do so by their employers’. Telstra drew attention in that regard to the AAT’s further finding that Mr Peisley had testified that prior to his being injured he worked hours additional to his ordinary hours when extra time was needed to finish a job, secondly weekend work and thirdly recall work. In relation to that first category, Telstra paraphrased the AAT’s finding to the effect that ‘if [an] employee was working on a repair job which could not be finished within normal hours he would obtain a team leader’s authorisation to continue’, and further that ‘on occasions if the team leader could not be contacted the worker would continue to complete the job and invariably authorisation would be obtained to pay for the extra hours’. Purportedly on that footing, it was said by Telstra that the Tribunal did not appear to make any ‘distinction between these types of authorisation’, or in other words, so the Telstra submission ran, ‘if authority has not been obtained prior to performance of the work then the worker could not claim that overtime as part of compensation payments’. Upon this footing, Telstra advanced the following submission:

‘Instead the Tribunal appears to have created a category that does not fit within those worked by Mr Peisley or indeed within the evidence of circumstances where overtime became payable. In those circumstances to say that people who do extra work without an expectation of it being authorised as overtime is a category which is meaningless to be excluded from the operation of the Section. It is not an example of overtime at all’.

30 Why however ‘without an expectation of it being authorised’? There is a measure of unreality inherent in Telstra’s submissions having regard to the geographic scope of Telstra’s operations, its extensive networks, and the exigencies of satisfying customers’ needs and demands for restoration and maintenance of communications, particularly in circumstances of emergency need. The statutory notion of ‘required’ in relation to overtime work should be read in that potentially broad context.

31 Nevertheless Telstra contended that the AAT’s interpretation does render the word ‘required' meaningless and superfluous, and further that ‘[h]aving rejected the submissions of Mr Peisley it should have accepted the submissions of [Telstra] and followed Re Zarb’.

Conclusions

32 We are of the view that Telstra has failed to demonstrate error in the reasoning of the Tribunal and that the appeal must therefore be dismissed. Telstra’s approach to the construction of subs 8(2) fails to take adequately into account the nature and scope of work required to be undertaken by an employee such as Mr Peisley, including the incidences encompassing or involving varying geographical locations of engagement and varying distances from Telstra’s place or places of administration to or with which Mr Peisley was required from time to time to report and liaise, and the difficulties which may be encountered in communications between Mr Peisley and his superior or supervisor located at some central point of administration. Put another way, Telstra’s approach to construction of the statutory notion of ‘required’ does not adequately take into account the incidents of performance of the wide ranging duties of Telstra’s employees in Australia, and the manner in which Telstra employees, such as Mr Peisley, would communicate with their supervisors in relation to the hours they are to work. In an Australian workplace, relationships between supervisors and trusted employees are likely to be informal; the language is one of request and agreement rather than command.

33 The word ‘require’ is of wide import including ‘to have need of’ as well as ‘to call on authoritatively, order or enjoin’, and ‘to ask for authoritatively or imperatively’: see The Macquarie Dictionary (3^rd ed.), which additionally extends the meaning ‘to [inter alia] impose, need or occasion’ as well as ‘to place under an obligation or necessity’ and ‘to wish to have’. That scope of meanings indicates the importance of the context in which the word is used. In a modern context, the subs 8(2) notion of ‘required to work’ must necessarily take into account the nature and extent of the mutuality of an employment arrangement and its particular incidences, including the likely relationship between Telstra employees undertaking duties and functions such as those performed by Mr Peisley and their supervisors.

34 Consequently we think the word ‘required’, in this context, includes situations where the employee is placed under obligation by the employer, even by a separate agreement that may not be legally enforceable but which constitutes an authority to work the additional hours. Particularly should that be so in the context of services to paying customers of the employer, which are to be provided by skilled, unsupervised employees working sometimes at a distance from the employer’s places of administration. And of course to the extent that such giving of authority would tend to occur in the normal course, the statutory notion of ‘on a regular basis’ would also be satisfied.

35 In reaching those conclusions, it is appropriate to bear in mind that subs 8(2) of the SRC Act is in the nature of social legislation, related as it is to employee entitlements. Accordingly, in line with Bortolazzo, and as the AAT emphasised, it ought to be construed liberally in favour of Telstra employees.

36 Viewing subs 8(2) in this way, we think that the AAT was further correct in its determination, and for its reasons which it gave, that when Mr Peisley was working on recall in the varying circumstances described in the evidence, he was indeed working overtime and was required by Telstra to do so on a regular basis within the normal usage of overtime for the purposes of subs 8(2) of the Act. As the AAT emphasised, ‘[i]n each situation in which Mr Peisley worked overtime, he did so as a result of a specific agreement to do so’; being an agreement forming an incident to his contract of employment by Telstra, and moreover, that ‘[i]t was the existence of this agreement, whether or not it amounted to a binding contractual obligation, which brought about Mr Peisley’s working of overtime and thus brings it within the normal usage of "required"’. Indeed as the AAT also found in any event, ‘[i]n the case of weekend work, this was done as a result of an earlier agreement, usually made the previous Wednesday’.

37 There remains for resolution the third issue as to whether Mr Peisley was required to work overtime ‘on a regular basis’ within subs 8(2) of the Act. The relatively brief reasoning of the AAT, to the effect that ‘[i]t is the requirement to work overtime that must be regular’, not ‘whether the periods of overtime are regular in length’, reflects the text of subs 8(2). It is irrelevant to consider, as suggested in Re Zarb, ‘whether the pattern is "uniform or symmetrical"’.

38 Telstra’s application by way of appeal must be dismissed with costs.

I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Wilcox and Conti.

Associate:

Dated: 9 June 2006

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY		ACD 31 OF 2005

On appeal from the General Administrative Division of the Administrative Appeals Tribunal

BETWEEN:	TELSTRA CORPORATION LIMITED APPLICANT
AND:	CHRISTOPHER PEISLEY RESPONDENT

JUDGES:	WILCOX, CONTI & STONE JJ
DATE:	9 JUNE 2006
PLACE:	SYDNEY (HEARD IN CANBERRA)

REASONS FOR JUDGMENT

STONE J

39 I have had the benefit of reading the draft reasons of Wilcox and Conti JJ. I agree with their Honours’ reasons and proposed orders but would like to make some additional comments.

40 The interpretation of s 8(2) for which the applicant contends is unduly legalistic and treats ‘required’ and ‘voluntary’ as mutually exclusive terms. In its written submissions, Telstra contended that,

‘... if under the relevant employment agreement and the manner in which that agreement was put into practice, the working of overtime was voluntary, it was not required.’

41 This submission overlooks the complexity of the relationship that commonly exists between employer and employee and the relevant context in which that relationship operates. The analysis in the joint judgment of the multiplicity of meanings attributed to ‘require’ in the Macquarie Dictionary shows the importance of context. It is possible for an employer and employee to structure their relationship so that overtime is only required by the employer where the employee consents to that overtime. Indeed one would expect that an employer who is concerned to maintain good relationships with the workforce would endeavour to operate in this way.

42 Where this is so one can properly regard the overtime as being both required and voluntary. Once the agreement has been reached the employee is required to do the overtime and it would be legitimate for the employer to complain if an employee who agreed to do the overtime failed to do it. It is not inconsistent with this for the employer to relieve an employee from the obligation to work the overtime if, for instance, the employee so requests. It cannot have been intended that it would be necessary under s 8(2) for the employee to show that his wishes were not taken into account in assigning the overtime to him. Nor should the chronology of the arrangement be material. In my view overtime can be required by the employer irrespective of whether the employer or the employee initiates the idea that certain overtime should be worked.

I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated: 9 June 2006

Counsel for the Applicant:	P D Elliott QC & J Wallace
Solicitor for the Applicant:	Sparke Helmore
Counsel for the Respondent:	P Hanks QC & L Walker
Solicitor for the Respondent:	Pamela Coward & Associates
Date of Hearing:	2 March 2006
Date of Judgment:	9 June 2006